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Opinion: JP Morgan/Chase bails out California


California’s much heralded IOU’s will be redeemable with interest at Bank of America between Sept. 9th and Oct. 9th. Wells Fargo will accept them between Sept. 4th and Sept. 30th, but will only credit interest above $5.00. According to American Banking News, three other banks, Citibank, Bank of the West, and Union Bank have announced similar programs, but no dates or particulars are given. IOU’s can also be redeemed at the Treasurer’s office in Sacramento, or by mail at Attn: Registered Warrant Desk, 915 Capitol Mall, Sacramento, CA 95814.

In lieu of tax refunds, California handed out 457,238 IOUs totaling more than $2.37 billion between July 2nd and August 31st. The State of California has now received a “cash-flow infusion” courtesy of JP Morgan/Chase of $2.8 Billion. All of which raises an interesting question: If the State of California fails to make its payments to JP Morgan/Chase, could the bank the start foreclosure proceedings on the state, and throw the government out in the street? Just asking.